Nuance Gains as Icahn Builds Stake in Software Maker
The stock gained 1.2 percent to $19.33 at the close in New York, and earlier touched $19.50, the highest intraday price since May. Icahn holds about 16 percent of the shares, according to a regulatory filing today, more than the 9.3 percent stake he revealed in April.
Icahn uses holdings to seek change in companies he deems undervalued or ill-managed. While Icahn’s stake in Nuance is passive, his move to expand the investment suggests that he may push the company to sell itself or shed some businesses, according to Shyam Patil, an analyst at Wedbush Securities Inc.
“This signals that he’s here to stay,” Patil, who rates Nuance shares outperform with a $22 target price, said in an interview today. “If the company were to put itself or certain assets up for sale, there would be a lot of interest.”
Richard Mack, a spokesman for Burlington, Massachusetts-based Nuance, declined to comment. Icahn didn’t respond to a request for comment.
Potential suitors could include Microsoft Corp., International Business Machines Corp. or Oracle Corp. (ORCL), Patil said. It’s also possible that Apple Inc. or Google Inc. would be interested in Nuance’s mobile technology, he said.
After Icahn revealed his stake in April, Deutsche Bank AG and Mizuho Financial Group Inc. (8411) speculated that he might pressure Nuance to sell its document-imaging division, Bloomberg reported that month. Its voice-recognition technology, used on millions of devices, could make Nuance a takeover target for Microsoft, Avondale Partners LLC said in April, while Deutsche Bank saw IBM as a suitor.
Nuance plunged the most in more than six years on Feb. 8 after cutting full-year sales and profit forecasts, citing shifting demand for software. The company said at the time that transcription volume was falling as health-industry customers switched to electronic medical records and its new Dragon Medical speech-to-text software.
In 2013, the stock has dropped 13 percent, compared with an increase of 20 percent in the Russell 3000 Index.
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